China Taiping Insurance Holdings Co. shares fell sharply on Thursday amid concerns over its exposure to a Hong Kong construction project linked to a devastating high-rise fire that has killed at least 44 people and left hundreds missing.The stock slid as much as 8.1% in early trading before trimming losses to about 2% by late morning in Hong Kong. Firefighters continued battling the massive blaze on Thursday, nearly 18 hours after it tore through parts of the densely populated Wang Fuk Court estate in Tai Po.
The disaster was the city’s worst fire in decades, which erupted suddenly on Wednesday afternoon and rapidly engulfed several sections of the 32-storey complex, home to roughly 2,000 units.Authorities have arrested three men, saying flammable materials left behind during maintenance work had allowed the fire “to spread rapidly beyond control.”The buildings had been wrapped in bamboo scaffolding, a traditional but highly flammable material still widely used in Hong Kong.The fire began around 2:50 pm on Wednesday, with the estate under repair and wrapped in bamboo scaffolding, flames spread rapidly through the eight-building complex.The precise cause remains unknown, but officials believe leftover flammable material from maintenance work played a major role in the fire’s fast escalation. Rescue operations and investigations are ongoing.
China Taiping’s insurance exposure
China Taiping underwrote third-party liability and employee compensation for mandatory building and window inspection work at the complex, Bloomberg reported.The HK$316 million (US$41 million) project, which used bamboo scaffolding and protective netting, is now part of an ongoing investigation into the cause of the disaster.The insurer’s policy covers the full contract sum plus an additional HK$50 million (US$6.4 million) for accidents, and provides HK$200 million in employee compensation. Separately, the company holds a general property-all-risk policy worth HK$2 billion.
‘Seriously underinsured’
According to Bloomberg, Hong Kong Insurance Professionals Federation chairman Philip Mak said both the general all-risk policy and the construction-specific coverage are “seriously underinsured” given the scale of the multi-tower estate.Mak noted that rebuilding communal areas and replacing elevator steel cables will likely exceed the insured amounts. Individual flat owners may claim death or injury benefits under the HK$50 million accident portion, but he warned the sum is “nowhere near enough” in light of the number of deaths and the hundreds still unaccounted for.
